Determinants of private sector financing in sub saharan Africa: case study of Burkina Faso project

Determinants of private sector financing in Sub-Saharan Africa: case study of Burkina Faso

Thesis presented by

Brahima BANDAOGO

Supervisor

Professor Romain HOUSSA, Université de Namur

Tutor

Modeste DAYÉ, Université de Namur

Academic year 2017-18

Project presented as part of the requirements for the award of the
Advanced Master in International and Development Economics

Département des Sciences économiques/UNamur
· Rempart de la Vierge 8
· 5000 Namur

Ecole d'économie de Louvain/UCL
· Place Montesquieu 3
· 1348 Louvain-la-Neuve

«To my wife, Colette

and our son Imrane»

Acknowledgements

Since a thesis is always the result of the combined efforts and contributions of several people I would like to thank some people and institutions who have contributed directly or indirectly to this thesis.

Firstly, I would like to thank ARES (Académie de Recherche et d'EnseignementSupérieur) for its financial support which was essential to the realization of this thesis. Indeed, I have been granted a scholarship from this institutionthat allowed me to participate in the «Advanced Master in International and Development Economics» program at Université de Namur (UNamur). Undoubtedly, without this financial support it would be impossible for me to participate in this Master's program.

Secondly, I am grateful to my supervisor, Professor Romain Houssa and to my tutor, ModesteDayé who despite their busy schedule have spared no effort to follow and supervise this thesis. Professor Romain Houssais the one who suggested me the topic of this thesis. Undoubtedly, their comments and suggestions have improved substantially the quality of this thesis.Please receive here the expression of my deep gratitude.

Thirdly, I am grateful to the Economics faculties of Université de Namur and UniversitéCatholique de Louvain (UCL), particularlyto all the lecturers who took part in the «Advanced Master in International and Development Economics» program. They provided us with quality education that will undoubtedly boost our future career.I am also grateful to Pierrette Noël for all the support she gave us during our stay in Namur. Without her support our stay in Namur would not be enjoyable.

Fourthly, I am also grateful to all my classmates for the atmosphere of collaboration and mutual help they have created. I am particularly grateful to Issaka DINDANE who helped me with some tips and tricks about using the STATA software.

Finally, I would like to thank all those anonymous persons and all those that I forgot to cite who contributed in a way or in another to the realization of this thesis.

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Table of contents

Acknowledgements ii

Table of contents iii

Abstract iv

1. Introduction 1

2. Literature review 5

2.1. Theoretical review 5

2.2. Empirical review 7

3. Methodology 10

3.1. Empirical model 10

3.2. Data and summary statistics 13

4. Empirical Results 15

4.1. Determinants of firm's access to finance in Burkina Faso 15

4.2. Robustness checks 18

5. Conclusion and policy implications 20

References 22

Appendix I

Appendix 1: Formal no-agricultural private firms' size in Burkina Faso (in percentage) I

Appendix 2: sector of activity in which non agricultural firms were operating in 2009 I

Appendix 3: Major Business constraints for non-agricultural private formal firms in BF (%) II

Appendix 4: Proportion of each credit constraint status category II

Appendix 5: main reason why this establishment did not apply for any line of credit or loan III

Appendix 6: Stata outputs III